CGD Podcast: UK Election Reflection with Stefan Dercon and Laura Chappell

RANIL DISSANAYAKE:
Hello, everyone, and welcome to the CGD podcast. My name is Ranil Dissanayake. I'm a senior fellow here at the Center for Global Development. As we record this edition of the podcast, we are about five weeks post general election here in the United Kingdom, and the general election saw a change to government in a landslide victory for the Labour Party. And on the podcast today, we'll be talking about what this means for the UK's role in international development, what it can achieve and what might change now in the next five years. I'll be joined on this podcast by Professor Stefan Dercon from the Blavatnik School of Government and the Centre for the Study of African Economies in the University of Oxford, who was also previously DFID’s (as it was then) chief economist and my boss for a number of years. After his time as chief economist, he became an adviser to successive, I believe, successive foreign secretaries, who has been a sort of expert observer of the UK development policy scene for a couple of decades at least.

And we'll also be joined in a few moments by Laura Chappell, who's the associate director of the IPPR, the entity for public policy research, who, like Stefan and I, has been a development watcher from both the inside, the UK system and outside.

As I said, we're five weeks out from a general election, but before the general election came up, the result wasn't really in doubt. Everybody knew it was going to be a Labour landslide, and that led to a lot of people thinking that there were parallels between where we are now in 2024 and where we were the last time there was a new Labour government coming into power. That's 1997, where Tony Blair led the Labour Party to another landslide electoral victory. There are some similarities. The Tony party had struggled with economic management in the previous government, and there was a sense of optimism and desire for a different style of government around the country. But one area where it's absolutely clear that it's not 1997 anymore, it's international development. Much has changed. So, it's a very, very different moment in 2024 than it was in 1997 on international development. Stefan, without making you the old hand entirely, you were there at the front row in 1997. And can you say what's different domestically, internationally, why is the world so different right now?

What are the different challenges?

STEFAN DERCON:
Geopolitically, it was a very different time. This was a time of implicitly almost a bit of end of history, at least, in the developing world, you know? Unipolarity, the US, the West was rising there and then it was the time of the beginning of the fruits of globalization also, that actually a lot of these countries, not least in Asia, started actually to show to their own populations that engage in the global economy, brought dividends for poverty reduction. You start this big wave of poverty reduction first in East Asia, places like Vietnam that were totally transformed and actually going further west all the way into India, Bangladesh as well. It was an easy time in some sense. You know, you did development, economies were growing. The turning point is somewhere around 2015 and we're still in that phase. And we should just be realistic that we're living in a very different time. You know, the whole rising budgets in international development in the UK had to coincide with a period of otherwise government cuts.

And the legitimacy and the acceptability of that budget increase that's growing to the point seven, it was never really there in terms of, as seen from a broader public.

So, you started getting development, not anymore, just for the sake of, look, this sounds really good. This is a good way of projecting UK. You make a lot of difference in the world to form of solidarity, engaging with the world. You kept on asking for results for the UK. And I think we're still in that phase and the reality is different, you know, there is a craven to be a bit more outward looking, but it's not necessarily politically an ability whether it's true or not, we can talk about it, but to actually say, look, you know, we're going to put in a lot of the cash on the table while we actually don't have money for most things and in our own economies. But it's not just on the cash side. It's actually also on the other part of it, which makes the world very different from this '97 world to the 2005 world, which is geopolitics has changed a lot.

RANIL DISSANAYAKE:
Yeah.

STEFAN DERCON:
The world is much more complicated. Globalization is on the retreat. You know, you get protectionism in the US. You get protectionism everywhere. And I think what's really important for anyone interested in international development today is to start thinking of it. What will it need to look like for today, OK? And so, people would say, "Oh, it's all climate." OK. But climate, of course, is crucially important. But countries are in crisis and it's not self-evident how they actually will get out of it. So, you know, if we want to make global international development relevant and maybe even also in the government, we need to just be recognizing where these countries are, not just where we are in the whole cycle and trying to reinvent where we were in the past.

RANIL DISSANAYAKE:
So, a couple of thoughts that I had while you were talking just now. The one thing is that actually in '97, certainly by 2005, in some sense, a lot of the hard work had been done about restoring various countries from crisis. So, the Washington consensus, that brutal period of the '80s and '90s was pretty much, they had gone through, all those IMF riots and suchlike were in the past. But critically, the most important reforms, exchange rates and central banks and so on, they had stuck. So, that was already on the upward trajectory. Most of the world was growing in '97, including the UK, at a reasonable clip. People forget that. But John Major had managed to turn around the economy. It was also probably because there was a lot of growth at that time. Masood Ahmed, our former president here at CGD, called it the unipolar moment and I think he was really onto something, right? It was a moment where the large chunk of the global leadership, at least, in the West, where there is sort of some shared values and so on.

And, but then there was also still loads of challenges in '97, right? I mean, massive debt problems. There was still a great deal of conflict. But if you ask the average sort of economist in 1997, thinking about what are the prospects for decline of more than 50% in global poverty over the next 15 years, I mean, people would have laughed at you. The evidence of the previous 15 years were not promising. So, how different is it now?

STEFAN DERCON:
It's quite interesting because actually, you do know that at the time these targets were 2015, they were set basically extrapolating the lines that were beginning to emerge then. And so, it was only in Africa that they weren't quite sure that they could actually extrapolate, because at least most African countries have not started to grow. So, there was a predictability that if they could continue with a particular pattern, that you could actually make that kind of progress. But that's maybe pedantry as well. But I want to just reemphasize what you said, is this kind of unipolarity. We all dismiss Francis Fukuyama in the early 1990s when he talked about the end of history, but funnily enough, around development, it was an element of a period of the end of history. There was no challenge. In fact, anything that China was doing was totally complementary. It hadn't gone west again, it hadn't gone out again, but it was just a country that was in some sense, making it easy for the rest of the world by becoming the workshop of the world and bringing prices down and bringing the things there.

That's so different now, and we should not underestimate it. Is that, politically, this is not a 1980s. That's over. That time is over. They are this big player in the world and they are playing that world and they're challenging. That's the geopolitics as well. And of course, Russia is there as well as a disruptor and inviting other small scale disruptors to play a stronger role. So, there is a China that I wouldn't call a simple disruptor. It's still complementarities and there's competition. There's a disruptor there. It does make it as seen from countries much more complicated. And it, of course, also makes it much more difficult for a rich economy like the UK, how does it project itself to engage in it? This was in the 1980s when geopolitics was rubbish. It was a terrible time for the African continent because politics all the time had to play and you couldn't actually say, look, we can have a relative, you know, if it ever can exist, the relative purity in what you do on the developmental side.

And what you could do in late 1990s, early 2000 in Vietnam, let's not forget, it still is, but it was a communist regime and whatever, you could find a way of doing that, you could do an awful lot of things with these places. When geopolitics goes pear shaped, suddenly you can't quite act in that same kind of way anymore. So, that's a big difference. But also don't underestimate, as you said, as well, a growing global economy and globalization being part of that global growth. You know, when it's not happening, when the consumers of the potential things you can export, it's not necessarily getting much richer. There is not that demand to globalization thing. It's not so easy and self-evident anymore to think, where can I be complementary to what the relatively benign forces. I'm actually being forced to take a position against certain things, and I'm making a mess of it. (LAUGH) And I think that's what we'll need to find a way of being sensible within that.

RANIL DISSANAYAKE:
OK. So, we picked up on geopolitics being rather different. There's the challenge of not being a growing global economy. We've talked a little bit about climate change, which it's just additional global challenge that everybody has got to put their weight behind the fight against climate change. That's certainly how it's been pitched. There's another problem that I don't think we've mentioned at all, actually, in some sense in 1997, basically everywhere, which had high poverty, most places, there were poor, the amount of aid we could give could make a difference. And it brought you a sort of seat at the table, it brought you influence, there were resources of external finance. That is also now changed. Now, there's a lot of poverty in places where aid is a tiny drop in the ocean and where foreign influences minuscule. And at the same time, there's also poverty in places where aid still really matters and alternative sources of finance are unavailable. And that also makes it harder, in a way, to be a development agency.

So, as somebody who spent a lot of time advising governments, how do you organize your development function? How do you be a development agency in this kind of world?

STEFAN DERCON:
So, the easiest choice would be to do all the development on climate, because there is more chance to make it politically acceptable in Western countries, in rich economies. And so, you can play this. But you're right to think, look, at least a few words of caution. Climate is one of these medium run, long run urgent problems, OK? So, yes, there are, of course, things happening now, but it's one of these things if we don't act now, the future is even bleaker. There is a longer term. The biggest problem, as seen from countries now, is that they also need to still be able to deliver in the short run, politically, economically in their societies. And that's where we'll want to come to in a moment. You'll still need to have an agenda that talks to where countries feel that's their challenge also today. There is that medium term challenge that gets worse and worse, we need to address. But there's other challenges there as well that they need to do. But there's also another side to it that we should never forget.

If we want to focus entirely on climate and on climate mitigation, which is a key thing where we need to focus on we collectively as a rich economy, you want to focus largely on these places that if we don't act now...

RANIL DISSANAYAKE:
Yeah.

STEFAN DERCON:
We are getting in more and more trouble. So, you go to fast growing countries, you go to the fast growing Asian economies, so an external once told me, and I cannot but agree with him, the existential threat is actually fast infrastructure growth in Asia and the energy sources in the Asian economies that grow fast. But as, of course, that's not where the deepest misery and problems are of deep poverty and stagnation, where there is no root for themselves to get out of it. And that comes back to that. There needs to still be a relatively short term offer. How do you can actually help some of these countries in the short run? Now, this is where I say, OK, what do we need to do in development? So, I do think, of course, we need to have an answer on climate issues. But let's not forget that there's an awful lot of adaptation needs to be done, the starting places that we can at least make stronger because for them it's going to get worse and not be totally obsessed. We need to do the entire mitigation thing from the development side.

Arguably, I'm one of these people who says shouldn't even come from development budgets. It should come from other budgets. But that's a finance discussion. The second thing is there's a lot of places that are relatively stagnant and there are low and middle income countries, and they're not all in conflict. There needs to be something there. We need to find a way of working with them. The macro crisis is there. It's an interesting thing that you said earlier. The debt crisis fell deeper in the late 1990s, early 2000. So, of course, true. But that doesn't mean that the macro crisis is less deep because an awful lot of debt is now domestic debt. It's leveraged in their own economies with all kinds of other stuff that then goes on. We need to find better ways of integrating politics, working international relations, keeping these things properly on the agenda and so on. And I think it's probably these three different things that are related for Labour, you know, do something sensible on climate, but on adaptation, do sensible things in countries, starting what these countries want to do themselves and build, that you can get them to help to grow again, just as we want our economies to grow.

And then on the fragility is that just really begin to innovate more. Not with some, it's not about money here. It's not about smarter little eight things. It's actually integrating everything and make it one of the key areas where you do it. Because as I said earlier, I think conflicts will get more messy because of geopolitics. So, we better keep a better eye on it and work better at it.

RANIL DISSANAYAKE:
So, what do you mean by integrate everything?

STEFAN DERCON:
Well, I mean, what you do in international relations or politics find ways actively of diffusing, for example, geopolitical dimensions in these conflicts. Just don't make them a game of geopolitics. Actually just do the reverse. How can you isolate some of these places relative to some of these things? And why can't the UK be a bit more like Norway in these conflicts, rather than a G7 Security Council, mandate holder and veto holder? So, be a bit more sensible in that respect.

RANIL DISSANAYAKE:
OK, so Stefan, that's an interesting sell to the Foreign Secretary to lean into being a middle power, which makes it a good point to pivot the discussion to specifically what we think the new Labour government is going to do and should do on international development. And for this part of the conversation, I'm really happy that we're going to be joined by Laura Chappell, who is the associate director for international policy at the IPPR, a UK based think tank. IPPR stands for Institute for Public Policy Research. So, Laura and I, we go back a long way because we both work to DFID, and we went through all of our interview panels and group exercises together on the same day, also with Nick Lee, who became deputy chief economist under you, Stefan. So, Laura, we've just been discussing the big grand pictures about how the world has changed. You know, why it's different in 2024 to 1997, the last time there was a new Labour government in power and how particularly international development has changed.

I mean, I guess like all of this adds up to, is this a difficult time to be an incoming minister for international development? Is a difficult time to be taking on this sort of big portfolio. Are we optimistic or not? Is Labour going to make a good go of this?

LAURA CHAPPELL:
Thanks, Ranil, and thank you for having me. I'm going to say yes, I am optimistic because I think in quite a lot of senses, it's still all to play for. The manifesto was relatively open whilst committing to development in principle and highlighting a few themes that, I guess, we'll dig into. And particularly with us having seen Lisa Nandy sort of holding the role as a shadow and then moving on to culture and so not taking it up and getting a new minister. Obviously, it's super early for her. So, yes, I'm going to say I am optimistic.

RANIL DISSANAYAKE:
Stefan, are you an optimist?

STEFAN DERCON:
You can't be in this business unless you're an optimist. You know, we can't work on development without massive optimism and optimism bias. No. Look, the manifesto indeed was a bit open book, and the one thing that I would really want to see is finding ways of mirroring what you're trying to do at home, also internationally. I think in my years working in government, there was this increasing deviation between these two. You were going to go to countries arguing for open and free trade, and then you were closing your borders on trade issues, whatever it is, but you got all kinds of things that were deviating. And so for Labour now they're talking about growth. If there's one thing when I go around African countries, South Asian countries is that they are craving for to actually, you know, can we get our economies to become bigger because that gives us more revenue, allows us to do all kinds of things. But then let's do it in a way, as I would think Labour can argue about, making sure it's inclusive and make sure it's consistent with some green credentials, sustainability, and that you begin to do this.

But don't do the latter two, the poverty and the sustainability. And I'm saying, yeah, but the growth doesn't matter. We've clearly set in the UK, the pie needs to grow. This is the only way we can really get to do these things, and I would love to see these three things starting with the G from the growth to actually coming together, of course, inclusive and sustainable, and why I'm saying that because the opportunity is there. You know, you talk about localization, what countries want, the countries you're dealing with, they want to create jobs for their people. So, anyway, we do this only because we're going to get some business for the UK or whatever, you know, just generally help these countries to grow. That's in our interest and it's in their interest, and not because of all kinds of short term transactional stuff.

RANIL DISSANAYAKE:
So, I love that. I agree with that. I think you've both said that the manifesto was open. I was going to say it was thin, but you know what? It amounts to something similar. There's not much on foreign stuff in the manifesto, which means that they can be creative. They have the opportunity to set a real agenda. I think you've got the right agenda there, Stefan. If you haven't read it, listeners and both of you, Stefan and Laura, I would read the recent piece that was published by ODI by Roli Asthana and Mark Miller, which was about an international economics agenda. Basically very much exactly what you just said, Stefan, like mirroring what we say domestically in our international policy. And you know what? I think that would then be a point of continuity, actually, with the 97 moment, because pressure loft growth was extremely skeptical of the sort of NGO-ization of international development. And she thought that the thing that mattered was like poverty reduction. And you get that by growth.

Yeah. She wasn't wrong, she really wasn't wrong.

LAURA CHAPPELL:
I think the other piece where it mirrors what Labour is trying to do domestically is that, yes, they are 100% talking about growth, but they're also talking about productivity based growth. And then when you look at the language that's been used around growth and international development, they're talking a lot about economic transformation. So, it's another way of saying what you said, Stefan, that it's not any deal, any transaction, anything that notches up the numbers. It's actually like what kind of growth are we generating? Is that about productivity? Is that about helping countries to sort of move up value chains, transform their economies and sort of create that self-sustaining growth? So, I think that's another way in which it's quite a helpful mirror in terms of how Labour is talking about its ambitions for the UK, and also how it's framing this development project.

STEFAN DERCON:
So, I like that a lot, and it makes a lot of sense as well. Imagine that you used your development policy in the spirit of what Laura said, helping countries to take advantage of that decoupling, of actually getting themselves entering into these value chains diversification. Ethiopias, the Tanzanias, the Kenyas of the world or the Ghanas been working a lot in Pakistan. Maybe they're even there, you know, can they take advantage of the fact that, yes, there is a political imperative to be a bit less dependent on China. So, actually use that as a way of getting these countries then to do the transformation and the productivity growth that they're going up the value chains and so well. And so, you could play that as well and having a fairly coherent policy as a result.

RANIL DISSANAYAKE:
I really like that. One of the comments I made about the “securenomics” piece that really and Mark Miller wrote was it was striking how much of that echoed things that people like you both and myself were saying when we worked in DFID, you know, like jobs, growth. Yes. Make it inclusive. Yes. But you know, the productivity is where we really need to start thinking about, where we should be creative. We should try and work on these things. But I want to just be the devil's advocate for one second. You know, there's that caricature of a certain group of economists, is that we just don't know how to do growth. So, instead we should do bed nets. What's your answer to that question? I'll start with you, Steffen, because I can see you laughing into your hand as I say it.

STEFAN DERCON:
Gosh, you want to get me in trouble again, isn't it? (LAUGH) I mean, it's a very respectable view that actually, you know, says we should do the things we know how to do. And if we have a very strict definition of how to do things, then yes, we'll do bed nets. And there's nothing wrong with doing bed nets or deworming or things. You can create a lot of certainty for yourself. When you are as big a player as the UK is with its development budget, you can be a bit like a venture capitalist. You can be as someone who takes some risk and takes some bets. You know, we do need to take these bets on growth, because the probability of success may not be that big. But in the end, these are the big transformative processes. And so, you want to focus on that transformation and trying to do it now. Do you say we don't know how to do this? Well, we know that countries have done it. So if you find ways of supporting what's happening, you need a lot of things in place. And you know, I could go on about it.

And you know, I've been working quite a lot in Pakistan in recent times. And yeah, you need political stability, political commitment and things, but it doesn't look unfeasible to do certain things if you get these things together. But it does mean your chances of success are relatively small, but you need to be opportunistic, but also calculating and say, look, there's a window of opportunity. So, if I say, look, today, Ethiopia is doing actually a very serious economic reform, something that for the last 15 years, a lot of the donors have been saying you need to get your macro economy sorted. They're doing it and say, well, that's your window of opportunity. Then actually step in and go and help that. That's what you then need to do. Bangladesh now, actually, there's a real opportunity now to do a bit better even while they were doing before, you know, they were not doing too badly in the economy. But I don't see it necessarily that I'm going to get quick growth and transformation, you know, in eastern Congo, then say that's not why I do it.

So, I don't mind you doing bed net in eastern Congo or indeed to sort of some vaccinations and do the main thing because I can't see that much you do. But in the places where you can do it, don't start with bed nets in today in Ethiopia, in Bangladesh, that's not where the window of opportunity is. Maybe to add to that is because you have a broader set of tools than just a bit of resource and a bit of knowledge for the program. You know, you can be a political player, you can be supportive politically, you can bring in other assets to the table, you can negotiate and help these people negotiate good trade deals, you can do all these things with these places. What you can't do if you're only a small NGO, you know...

RANIL DISSANAYAKE:
What do you think, Laura?

LAURA CHAPPELL:
So, I mean, it's not one or the other, right? But a couple of reflections on what you said, Stefan, where really matters, right? And also, your approach based on where really matters. So, you draw the sort of eastern Congo, Ethiopia distinction, like if there's an opportunity to do that growth project, we should surely be trying to seize that opportunity. But also, you might want to do bed nets in both places, but you might have different modalities, right? The other thing I'd say is supporting growth, and you sort of nodded to this, is much more of a multi-player game (LAUGH) and you know, you can't deliver that just through spend. So, that's where I really hope that the UK is now going to be able to capitalize on the merger and be able to say, OK, we're now trying to bring tools together in order to support results. So, can we be really drawing on our diplomatic capability in countries where there is opportunity to reinforce this? So, we're acting as a political player and a developmental player and as a trade player, etc, to do that growth piece, which is trickier, but I really hope the UK is heading in the direction of trying to pull those tools together.

RANIL DISSANAYAKE:
Well, yeah. You know, when the merger magic happened, I just left DFID and I just started with CGD. And Stefan and I wrote a paper, a series of papers where we were basically trying to make exactly that point, right? If you've done this, if I need to use everything in the new organization you've got, and like, not just do development using foreign policy and diplomacy, but also do diplomacy and foreign policy with also a bit more of a development lens. And I actually think for the last four years, they've done the second part way better than the first, in a sense, in that they've got lots of people as diplomats who have real development expertise in places where that really, I think, can only help their role as a diplomat. I'm thinking, you know, Somalia, South Sudan and Myanmar, the ambassadors there are all people with development backgrounds, I don't think it's worked the other way around. In fact, in what we've seen is empty development posts. Not that much interest in taking the large bit of the organization with the large amount of career opportunities and applying it to the small bit of the organization with the fewer career opportunities to date.

STEFAN DERCON:
I want to try to make a simple point, and because it's in a way it chimes, I think, with what also you're implying. I've spent a lot of time travelling in the last two years, and it's been a joy. And in most of the cases, linking up with FCDO, ex-FCO, ex-DFID people, you know, both groups, I find it very striking that actually in quite a few posts on the ground, this actually is not working too badly. They begin to learn to do it. There's issues to do, who is in charge of what and whatever. There's all kinds of turf battles still going on, but actually I don't have a terrible experience. It's actually quite a positive experience that you can begin to see it, you know, and you're getting your ambassadors, high commissioners batting also for something that would have been in the past, more the development thing to do if it really works well, especially on these bigger economic and growth and the direction of of economic policies in countries and the support and so on around it. And also, more and more posts, because they don't have much money relearning how to actually really engaging with governments and working with governments.

And so, it's a really good thing. It's still not everywhere. And there will be people listening and saying, not be my place and I've seen it badly. I do worry still about London, and there's still a huge amount of work to be done in London, where I don't think actually it's working and where the development side, let me put it bluntly, is still deeply patronized. And that's actually because that culture of ex-FCO was very centralized into London. And in fact, my main advice on all that would be the only way you're going to solve this is now actually, to be honest, also, to get better foreign policy is to actually decentralize more. Is to actually, especially in these developing countries, the lower middle income countries, the African countries, South Asian and whatever, decentralized more because then it begins to work better.

RANIL DISSANAYAKE:
OK, I agree, like on the decentralization point in particular, the UK is always sort of gone in waves on this. There's been waves of decentralization and then ways to recentralization and suddenly the center realizes, oh no, we don't have control over everything. But I think actually this last bit of the conversation has been really helpful because we've all essentially given an idea of what we think the priority for the UK should be, a little bit on internal structure, Laura in particular, actually, what do you think Labour's actual priorities are right now? Do they align with what we said?

LAURA CHAPPELL:
I think that the foreign secretary, David Lammy, has a real commitment to the UK doing better across the global South. I hope and think it's a matter of prioritization that actually he wants to carve out more time, space and attention for UK foreign policy for engaging with countries of the global South. And I also think it's a matter of tone. It's really moving from the commitment which there already is in the white paper to be that sort of like mutually respectful, mutually beneficial, genuine partnership, behaving in a different way. And it actually ties to the previous point of maybe about decentralization. Like one aspect that could support that agenda would be putting more of our resources and decision making at a country level in order to actually respond to Global South priorities. But anyway, I'm getting on to what I think would work, but I think that Global South tilt is real and a real opportunity for development. I also think in the manifesto, they specifically laid out five sort of thematic priorities.

I think three of those are worth stressing in particular, and Lisa Nandy in particular, talked a lot about debt as a sort of framing for international development work. There's a lot of NGO focus and pressure on the UK doing more on debt. And also, I think there's like a muscle memory of the UK playing a really important role in debt cancellation around Gleneagles and not just the UK Labour (LAUGH) and (INAUDIBLE), etc. So, I think that's a big theme, but it's super tricky to unravel and unravel in a way which is going to bring all the different parties along, that's China or private sector, and also set up the system. If you're going to sort of try and rejig things, how do you create a better system for next time? So, I think that's a priority, but hard. And then we talked about economic transformation. I think that's great that that's in there. And it's great that they've got that framing. And then I think climate, that was another theme that was picked out in between at a high level in the manifesto.

I think that will be a priority in terms of international policy. I think really hopeful that we'll see the departments coming together across DESNZ, FCDO. It's never easy, (LAUGH) but I think there's a genuine commitment to this sort of mission government, so hopefully that will play through to climate as a theme. And again, as you talked about, Stefan, there's that mirroring of domestic and international priorities. So, climate is one of the five key missions. And I think that will feed through into being an international priority. The final thing I want to highlight in terms of priorities is that David Lammy has placed a lot of focus on sort of kleptocracy and illicit financial flows. And for me, that's a really interesting issue for him to be pushing on and putting personal political capital behind. It's both interesting because it's quite a nice example of working with countries of the Global South on an issue that affects all of us. And it's also an opening for the sort of, I don't know if it's still called this, but like Beyond Aid Agenda, but basically starting to recognize that we don't just deliver impact through what we spend, like our own policy decisions in multiple areas really affect developing countries.

So, I think that's a really interesting theme, both in itself and potentially illustrative of a slightly different way of working.

RANIL DISSANAYAKE:
So, CGD, we're actually set up with the mission of influencing rich country policies as they pertain to developing countries, specifically because of this Beyond Aid idea, we've been talking about Beyond Aid for like 20 years. And I don't think that many donors have really managed to make much progress in the last 20 years. Illicit financial flows, Stefan, I know you've written something about this drawing on work that your former student, Matt Cullen, my former podcasting partner has done. What do you think of all of that?

STEFAN DERCON:
No. So, look, all the things that Laura highlighted and this kind of themes, one thing that they have usefully in common is that if you really want to be serious about them, and I include the economic transformation bit there as well, it's not just about I do something good in a country or I spend some money well, they would put pressure on their diplomats as well. And it would be about international policy. Think of illicit finance, of course, it starts a bit of a fight with the facilitators of it all in the city and the lawyers and the accountancy firms, but it also will force you to make some choices on Dubai and Singapore and all these places. And so, it actually kind of says, look, if you're really serious about these things and you want success, this is not simply things you, quote, unquote, can buy. So, you're setting the bar very high for yourself, but it's actually good. And for me, it would be great if we could, in due course, judge them. Not so much in terms of how much the budgets reflect it, but how much the actions and behaviors of the organization reflects it and how important it politically keeps on being pushed.

And maybe they didn't realize they put the bar so high because it actually (LAUGH) is really difficult stuff. And you know, coming back to this earlier point of how do you play that game? By trying to be powerful, but not too powerful so that nobody will listen to you, (LAUGH) be that middle power that is listened to, the sound of the voice of reason to find progress, whether it's on climate negotiations and discussions and things or raising money, but also transformation at some trade stuff and on that, which is so much more complicated than it was in 1997. But exciting stuff if they genuinely try to deliver it, and not just a bucket of a bit of money and a little center that will write some papers on it and we've ticked the box.

RANIL DISSANAYAKE:
This is like you say, the bar has been set really high on this, which is great. I agree with both of you. And it's an agenda that, you know, you expect Labour to really want to get behind as well. Like they'd be willing to spend more political capital on this. I think we've talked about a lot of things that we think the Labour will want to prioritise, and what we think they should prioritize. What do you want Labour not to do? Like what do you think that for the next five years we should just like avoid like the plague?

LAURA CHAPPELL:
The thing I would like to see this government try not to do at least too much of is announceables, gearing action towards a thing that you can announce. My feeling is that it mirrors the process of government as a whole, but I'm not honestly sure how far people are listening to the announcements about international development. So, is it worth (LAUGH) putting all that effort into designing something which sort of hits a narrative that you care about, (LAUGH) but is probably quite short term, absorbs a lot of resource? I feel like that search for the new can be quite self-defeating with our partners. Although they want us to be consistent, they want us to facilitate, enable support. They don't want us to sort of grandstand. So, I think, announceable takes us off track and is not helpful for our partnership role. And I'm being an optimist here, but I'm going to continue to be, (LAUGH) I really hope we have an opportunity to do less of this, particularly if we have more ministerial consistency, which is something that Labour have talked about.

If we have that greater consistency in ministers, hopefully we'll have a bit less pressure to have that new agenda, that new announcement, etc. And then we can do a bit more as the UK, if that continued focus on relationships and continued delivery and stop getting pulled pillar to post with the shiny things.

STEFAN DERCON:
So, there's a couple of things. I think on the ground in countries, we should learn to be working really with a set of guardrails, principles that the way we work with them, you know, there won't be perfect, but we're not perfect either. You know, we can try to do things focused on working with them, trying to get systems to be delivered, to be set up and doing it and just not going for the very quick results. Don't try to say, "Oh, we're just going to do it in parallel." It's not the way we should be working. And the second thing is linked to the announceable, this obsession with announcing the money, money, money, money, money. A lot of development is not about money. A lot of development is actually policy making and try to do reasonable things. So, just go away from the obsession with the money. And maybe the third one is all related is, yeah, don't do this kind of naive transactional selling the whole thing, selling the UK quickly or whatever. I'm doing development because it will solve the migration crisis.

I will do development because it will get British businesses. Yeah. It's thinking carefully about how you try to communicate about development. I think the merger has been helpful because there is no obvious reason to attack the development part now, because it's all a bit more murky, mixed in with the other things.(LAUGH)

RANIL DISSANAYAKE:
I think our objective should simply be do the most important things that we can achieve, and then start thinking about how do we count the money, where does it all go? But like just start with like within our resource envelope, like just do the best things, That's one thing. And then the second thing is possibly slightly more controversial, is going to be any kind of mitigation that isn't driven by a development benefit, right? So, like if you're going to do a climate mitigation thing as part of your development policy, it should be driven by the development benefit. There's lots of stuff that fits that, you could work on, say, crop burning, which has got lots and lots of huge development benefits. And there's a big climate mitigation thing. You could do a lot of green infrastructure because countries need loads of infrastructure. So, development benefits, right? But nothing that you should be doing from your development organisation, from your development portfolio on climate mitigation should not be driven by the development side.

OK. So, last question before we start the wrap up. So, this is the question we ask every guest on the CGD podcast. If you had a magic wand, what policy would you implement globally? Like what's the thing that you would change?

STEFAN DERCON:
The one thing I think that is now detracting us from a kind of growth developmental approach to a lot of developing countries is actually the climate agenda. If I could force the US and Europe to take the entire burden of climate change on them, I would be delightful. I'll pay more taxes to that (LAUGH) straight away. If I just did that form of climate justice and I could have that magic wand, fine. And I would give rope to a lot of low income and low and middle income countries and even higher middle income countries to actually, you know, I give you rope because we are going to do the big heavy lifting for the two degree world or the one and a half degree world even.

RANIL DISSANAYAKE:
Awesome. That's a great one. Wow. OK. Laura, do you have any advance on that?

LAURA CHAPPELL:
I did have a sort of think about this, and I think we haven't talked a lot about multilateral institutions, but they feel absolutely essential, (LAUGH) possibly even more essential to success than they have in the past. And yet it feels like they're struggling, I guess, by this, I particularly mean the world Bank and the IMF. They're struggling to sort of meet the challenge, whether that is voice and giving enhanced voice, particularly to the poorest countries, and then to meet the challenge in terms of stretching their balance sheets, making more of their capital. So, if I could wave my magic wand, I would see that IMF and world Bank boards agree on greater voice and meaningful steps for making more of the balance sheets. And I think that would be hugely beneficial both in terms of scale of financing, but also faith in those institutions which are super important. But also a little bit of a prod in terms of faith and multilateralism per se.

RANIL DISSANAYAKE:
OK, cool. So, part of your magic wand is spent on accountancy, which is very, very on brand for CGD. (LAUGH)

LAURA CHAPPELL:
And also justice.

RANIL DISSANAYAKE:
Yeah, maybe I should chime. I could channel my inner, Charles Kenny, and my inner, Michael Clemons, and say, like, make it much, much easier for people to move for good reasons around the world. I think that would probably be my one big policy change. It's been such a massive pleasure having you both on the podcast. I've learnt a hold great deal and maybe in five years time we won this and we'll compare notes between what we thought at the beginning of the Labour government first term to, well, first, however many, who knows, term, to what actually happened. Yes, thank you all very much.

SPEAKER:
Thanks for listening to the CGD podcast. You can learn more about the topics discussed on our website, cgdev.org. See you next time.