The Observatory #1: African Union joins the G20 and more
As part of our work at the Effective Institutions Project, we try to stay on top of what important institutions around the globe are doing, thinking, and saying, and how that might relate to people’s lives. It’s our way of answering the question “what’s going on in the world?” through the lens of institutions. Every two months, we take a moment to pull all of those threads together into a horizon scan covering stories that we think ought to be on our radar–and yours. While our horizon scans are issue-agnostic, we curate them based on our judgment about which global challenges and opportunities seem generally most consequential for people around the world, both today and in the future, guided by our prioritization framework first published in 2021.
This first horizon scan features our take on a selection of important and underrated institutional stories from summer 2023. Note that since we recently published our Primer on AI Governance, we deprioritized a few items that were already discussed in depth there.
Alongside the newsletter, we’re excited to launch a partnership with Metaculus to curate a collection of forecasting questions that address core uncertainties about institutional actions and contexts we’re seeing as particularly important. By crowding in high-quality forecasts from the Metaculus community on key strategic questions, our goal is to improve the quality of decision-making both at EIP and in the wider ecosystem. In each issue of the Observatory, we’ll share one or more forecasting questions tied to that edition’s top story. The full set of questions, most of which were developed in partnership with Metaculus staff and did not previously exist on the platform, can be viewed here.
1. The African Union joins the G20
The African Union, a 55-nation intergovernmental institution with some parallels to the European Union, has been made a permanent member of the G20 following the most recent summit in India at the beginning of September. The AU’s geopolitical significance is arguably underrated given that Africa is expected to make up 38% of the world’s population by the end of the century and account for almost all of the world’s population growth over that time, according to UN projections. Giving the continent a unified voice in a multilateral forum like the G20 could bolster the AU’s role even further: already, prior to the AU joining, the G20 represented 85% of the world’s GDP, three-quarters of global trade, and two-thirds of the world’s population.
As a G20 member, the AU will eventually not only take up the institution’s rotating presidency but also have a say in the agendas of the previous and following presidencies. Of particular interest, and yet to be fully determined, is how the AU will choose to represent the continent’s interests on the world stage, and who will be making those decisions. The G20 membership was accepted by the President of Comoros, which currently holds the yearly rotating AU Chairpersonship. An open question is how effectively the AU will be able to push the continent’s interests if a completely different African president attends every year. To that end, the AU chairperson’s office will likely require a sherpa, who is tasked with preparing the summit on behalf of the leader and would likely exercise significant influence determining the “African position” on global issues.
Leadership in the G20 (or, now, the G21?) is likely to put the AU’s resilience as an institution to the test. Already, the body has suspended six of its members as a result of a wave of military coups sweeping across the continent. Meanwhile, the African Union is incredibly financially constrained, with only 32% of its annual budget being supplied by member states and 40% of states failing to pay their annual dues. Between 2018 and 2021, the total contribution of member states to the AU’s budget actually fell by more than a third. The gap is made up by governments (traditionally European and Northern American, but increasingly South Korea, India, China, and Turkey), multilateral bodies like the EU and the World Bank, and to a lesser extent private donors like the Gates Foundation (source, 60 ff.). On paper, the AU has the potential to become one of the most consequential institutions in the world over the coming decades – but it’s up to national leaders on the continent if they want to make that dream a reality.
Forecast:
2. Anthropic, Google, Microsoft and OpenAI announce the Frontier Model Forum
In July 2023, Anthropic, Google, Microsoft, and OpenAI set out plans for an industry body explicitly working towards “safe and responsible development” of frontier AI models. The forum’s objectives are advancing AI safety research; identification of best practices; collaboration with policymakers, academics and civil society; and supporting efforts to use frontier AI models to tackle global challenges. The announcement followed less than a week after the four companies, along with Amazon, Inflection, and Meta, made voluntary commitments to the safe development of frontier models at the White House including “sharing information across the industry and with governments, civil society, and academia on managing AI risks.”
The Frontier Model Forum provides the first, and plausibly the most significant, opportunity for technology firms at the forefront of AI development to coordinate on the specifics of how to evaluate the safety of their models. In EIP’s own research, we’ve seen that coordination of this nature is becoming increasingly challenging due to tightening information security norms and intensification of competition within the space. This makes the establishment of the forum a rare and important development, though its success is by no means guaranteed.
In October 2023, the Frontier Model Forum announced Chris Meserole, former Director of the AI and Emerging Technology Initiative at the Brookings Institution, as Executive Director, along with a $10 million AI Safety Fund supported by private donors including Jaan Tallinn and the David and Lucile Packard Foundation. The fund will support the development of evaluation and redteaming techniques, with a call for proposals expected in the next few months.
While membership is open to any organization that is developing and deploying frontier models, demonstrating strong commitment safety, and willing to participate in joint initiatives and aid the progress of the forum’s endeavors, as of October no additional companies beyond the initial four had joined the group. This is of potential concern since the lack of participation by other frontier labs, including Meta, which is widely considered to be least receptive to safety concerns, may reduce the Forum’s efficacy and ability to overcome competitive incentives against sharing information.
3. United Nations High Commissioner for Refugees struggles to keep up with growing demands
The UN’s primary agency serving refugees has raised only 44% of its 2023 budget as of September and faces a funding gap of $6.13 billion. UNHCR is so concerned about the situation that it has published an extraordinarily candid report detailing the activities that won’t happen if it doesn’t meet its proposed budget of $10.929 billion this year.
As dramatic as that sounds, the gap isn’t a result of falling donations: indeed, the agency’s total expenditure was less than $2 billion just two years ago. Instead, it’s a reflection of unprecedented demand for humanitarian aid and refugee assistance arising from new situations like the wars in Ukraine and Sudan and earthquakes in Afghanistan, as well as cuts in spending by UNCHR partners like the World Food Programme. UNHCR internal reports cite a sharp increase of 20 million displaced individuals from the end of 2021 to the end of 2022, bringing the worldwide total to an estimated 110 million refugees as of May 2023.
During the UNHCR’s recent Executive Committee meeting, High Commissioner Filippo Grandi called for more unearmarked funds from pledging countries such as the United States and Europe. Notably, the UNHCR has no jurisdiction in Gaza, where the UN Relief and Works Agency for Palestinian Refugees in the Near East (UNRWA) operates instead. UNRWA was itself already in dire financial straits even before the growing humanitarian crisis there, and has posted its own call for emergency funding.
4. A “crown jewel” of the US’s semiconductor strategy is coming loose
Less than a year ago, Joe Biden came to Arizona for what was to be a prized accomplishment of his administration: the opening of a new factory to manufacture semiconductor devices built by the world’s leading operator of such factories, Taiwan Semiconductor Manufacturing Corporation (TSMC). As a private company, TSMC holds outsized geopolitical importance by virtue of manufacturing 90% of the world’s most advanced microchips from its facilities in Taiwan – chips that are increasingly coveted by tech companies and governments alike as critical pieces of the supply chain for building frontier AI models along with other technology products from smartphones to cars. TSMC’s $40 billion investment in the plant, motivated in no small part by massive subsidies included in 2022’s CHIPS and Science Act, ranks among the biggest foreign investments in US history.
Now, though, the opening of the new site has been pushed back a full year, from 2024 to 2025, amid a panoply of headaches for the company and the local community alike. Among the problems plaguing the site have been a domestic worker shortage, accidents, union resistance to bringing in workers from Taiwan, and water supply issues related to the desert location. TSMC had planned up to six expansion phases for the site over the years, but several contractors and suppliers now believe most of that won’t happen.
Semiconductor supply chains seem poised to play an increasingly critical geopolitical role as access to the computing power enabled by cutting-edge chips matters not only for developers of frontier AI models but also for regulators tasked with controlling risks associated with the technology. Last year’s investments in the CHIPS and Science Act were paired with the imposition of stringent export restrictions introduced last year and tightened in October 2023 that were designed to prevent China from gaining a competitive edge in the industry. Even as the US plant falters, though, the progress of TSMC’s plants in Kyushu, Japan (which remains on target for production of mature chips in 2024) has led the company to consider locating a second fab there to produce more advanced chips, and TSMC recently announced plans for a new factory in Germany as well.
5. A fractured opposition teams up to challenge Modi in the 2024 election
Earlier this year, India took over from China as the most populous country in the world, and is on track to become the world’s third-largest economy within five years. While nominally a democracy, critics have long observed that India has been experiencing an erosion of civil liberties under the administration of Prime Minister Narendra Modi and the Bharatiya Janata Party (BJP) since their ascension to power almost ten years ago. Investigative agencies target opposition politicians, journalists, and social activists, India’s Muslim minority (about 15 percent of the population) is increasingly marginalized, and a leading candidate for the opposition, Rahul Ghandi, was disqualified from his seat in the parliament earlier this year after being convicted of defamation in a case relating to Modi’s surname.
In a bid to reverse the tide, 28 Indian opposition parties have joined forces to form a political coalition called INDIA that will coordinate a direct challenge to the National Democratic Alliance led by the BJP in the next general elections in spring 2024. Modi, however, enjoys high approval ratings in India, to the point where he has been declared the most popular global leader, and the ruling party has recently introduced a new system to fund political parties which might decisively tilt the playing field in its favor. Projections as of October 2023 indicate that the BJP is expected to retain its large majority of seats in the Lok Sabha, though polling suggests that vote shares may still be within contestable range. Whoever leads India is poised to have a major impact not only on the lives of 1.4 billion people domestically, but also on critical geopolitical issues such as nuclear security, AI, and climate change.
What else we’re watching:
The U.S. government has begun the process of negotiating drug prices with pharmaceutical manufacturers for the first time, a breakthrough that could reduce costs for millions of patients and improve the solvency of the Medicare national health program, though potentially at some cost to pharmaceutical research and innovation.
Financing for lower income countries remains a sticking point in the development of the WHO’s “pandemic treaty” as member states continue to negotiate who should fund the expansive (and potentially expensive) “One Health” measures that link human, animal and environmental wellbeing.
India, the world’s largest rice producer (accounting for 40% of global trade), imposed a sudden export ban on non-basmati white rice in July and a 20% duty on exports of parboiled rice as part of efforts to keep a lid on local prices. Following tightened controls on wheat and sugar exports, as well, this development has already increased rice prices outside of India, impacting consumers in some of the world’s poorest countries.
The UN Secretary-General spoke out against the IMF’s and World Bank’s governance rules, lamenting that the institutions disproportionately benefit rich countries at the expense of poorer ones, which are highly indebted and have limited voting rights. The UN’s most important office-holder advocating so openly for reform of the “bias and injustice built into the current international financial architecture” signals a potentially significant shift of the Overton window in the direction of reform.
The World Bank has halted new loans to Uganda following the passage of a draconian anti-LGBTQ law that authorizes capital punishment for “aggravated homosexuality.” While the measure was pushed by civil society groups in hopes of putting pressure on Uganda’s government to roll back the law, it might also tilt influence to Chinese development banks which expressly market their loans as unconstrained by such conditions.
The European Commission has designated Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft as its first set of “gatekeepers,” understood as companies providing so-called core platform services such as online search engines, app stores, and social media networks. The designation obliges the companies to comply with requirements set forth in the recently-enacted Digital Markets Act in a bid to break up or head off monopolistic practices.
Google DeepMind added a watermarking feature to Google’s AI image generator in an effort to combat misinformation and misuse of AI-generated content, making it the first leading lab to follow up on this part of the voluntary commitment made at the White House in July.
DeepMind has introduced Robotic Transformer 2, a “vision-language-action” model which synthesizes text, audio, and visual data from both web-scale and specific robotic data into generalized instructions for robotic control. RT-2 shows increased generalized capabilities across different scenarios and significantly outperforms prior models on unseen tasks.
Amazon plans to position AWS as an infrastructure that supplies model access, customization, and raw computing power to developers, rather than releasing its own flagship LLM or product. The ambition is to situate Amazon as holding the tools to the AI industry, analogous to the company’s position in web computing.
Even as it remains the primary investor in OpenAI, Microsoft positioned itself as the “preferred partner” for Meta’s open-source release of Llama 2. Meta’s choice to make the model free for research and commercial use is a marked contrast to other leading labs, prompting raised eyebrows from policymakers concerned with how open-sourcing powerful models could go wrong.
WormGPT, an AI tool with “no ethical boundaries or limitations” designed to undertake illicit activities including drafting phishing emails, is being sold on the dark web. The tool offers hackers a way to perform attacks on a much more substantial scale than previously possible and provides indication of a potential incoming rise in LLM-facilitated cybercrime.
Recent reporting has suggested that Huawei may be building a secret network of semiconductor fabrication facilities across China in an effort to circumvent US sanctions, with the help of a $30 billion investment from the state.
Norway’s sovereign wealth fund, a major investor in U.S. tech firms, encourages the development of a comprehensive and cohesive regulatory framework for AI, and warns that “boards are absolutely not on top of” the issues surrounding AI.
BlackRock, one of the largest investment management firms in the world, had built its brand in recent years on corporate social responsibility, but it may be dialing back its embrace of environmental, social, and governance (ESG) investing amid a backlash from conservative lawmakers and attorneys. BlackRock backed only 7% of shareholder proposals focused on environmental and social considerations in the 2022-23 proxy year, and appointed Saudi Aramco Chief Executive Officer Amin Nasser to its board in a signal of commitment to the oil industry.
Indonesia is now invited to every OECD meeting and has gained in-principle support for an eventual membership from OECD Secretary-General Mathias Cormann. Membership would make Indonesia the third Asian, and first ASEAN nation to join the OECD, providing indication that the multilateral is moving in the direction of being more inclusive to emerging economies.
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