It is easy to be pessimistic about multilateralism nowadays. Recent international gatherings have yielded only unfulfilled promises. At a time when US President Donald Trump is abandoning America's international commitments, rejecting multilateral initiatives, and sowing chaos and confusion in global trade, can the Conference on Financing for Development (FfD4) at the end of this month go any better?
To be sure, the United States may well act as a spoiler in Seville. But that does not mean that the summit will be a bust. After all, America's withdrawal from the 2015 Paris climate agreement during Mr Trump's first presidency did not lead to its demise. While action has been limited, almost everyone recognises that without the agreement, climate change would likely occur even faster.
It is clearly possible for the world to make progress on shared challenges without the US. The lack of US involvement in the FfD4 might even prove advantageous, given its record of extracting compromises that favour its own multinational companies, and then refusing to sign or enforce deals anyway. The negotiations for the OECD Global Tax Deal, finalised in 2021, are a case in point. But success will require other countries to fill the global leadership gap and demonstrate a credible commitment to the multilateral cooperation that is essential to our survival. Fortunately, the first draft of the FfD4's outcome document recognises this imperative and advances many useful and practical policy proposals, including several from the final report of the International Commission of Experts on Financing for Development.
A key focus of the document is enabling greater domestic resource mobilisation. An outdated international tax system and inadequate checks on illicit financial flows are a severe constraint on low- and middle-income countries' budgets. Reforms in these areas would go a long way toward reducing income and asset inequalities and increasing tax revenues -- vital to finance investment in health care, education, and climate-change mitigation and adaptation.
More broadly, participants at the Seville summit must seek to address the lack of a global financial safety net. A first step could be to initiate regular allocations of the International Monetary Fund's reserve asset, special drawing rights (SDRs). To enhance the intervention's impact, the SDRs could be distributed according to need -- a departure from the current approach, which allocates SDRs in proportion to IMF quotas, meaning that the largest shares go to the countries least in need. The IMF could also introduce SDR swaps to meet the immediate liquidity needs of economies that do not benefit from the US Federal Reserve's central-bank liquidity swaps.
But this is only the beginning. The world's approach to tackling shared challenges -- from climate change to public health and sustainable development -- has plainly failed.
It is time to embrace an entirely new model of "global public investment", with all countries contributing to the provision of shared public goods according to their means. This will require, for starters, fundamental reform of the IMF and the World Bank. Both institutions need to adopt a more countercyclical approach to lending. Moreover, they must stop linking loans to oppressive conditionalities that favour the interests of global capital over the well-being of people and the planet. In general, multilateral banks must increase their lending significantly to meet social, developmental, and climate needs, which in turn requires robust, reliable funding. But there is a major barrier to such changes: important decisions at the IMF and the World Bank require an 85% voting majority, and with a 16% share of those votes, the US effectively wields a veto. Without major governance reforms, these institutions will remain hamstrung, countries will increasingly find ways to bypass them, and they will fade into irrelevance.
Meanwhile, international financial regulations should be strengthened, including by pursuing greater coordination of national laws -- possibly on a regional basis at first. Private finance, which has enjoyed decades of lax regulation and positive incentives, should be required to align its behaviour with social and planetary goals -- or face punishment. These proposals are hardly radical; such measures have been implemented in past phases of global capitalism, and they are manifestly in the interest of all countries. Nonetheless, in the current geopolitical landscape, they may appear unrealistic. That is why "coalitions of the willing" must take the lead in setting ambitious goals -- and doing what it takes to achieve them. The upcoming Conference on Financing for Development is a good place to start. ©2025 Project Syndicate
Jayati Ghosh, Professor of Economics at the University of Massachusetts Amherst, is a member of the Club of Rome's Transformational Economics Commission and Co-Chair of the Independent Commission for the Reform of International Corporate Taxation.